Trading Club: Weekly Q&A, 16-02-2018
Posted on February 16, 2018
Remember when it looked like the party was over for stocks, bonds, Bitcoin… and well, everything (but the VIX!) last Friday? You guessed it, that was a great buying opportunity with major indices including the Nasdaq, S&P 500 and Dow Jones Industrial Average up +8% or more from the lows seen this time last week. Bitcoin has also staged a rally back to 10,000 although cryptocurrency traders would be wise to heed the positive correlation to the move in equities (for now thats working for them, but should equities reverse downwards again, they should expect the same for Bitcoin, Ethereum, Litecoin, etc.).
Amidst the noise we have of course been applying our Checklist process to identify some quality ideas here at the Academy, as Trading Club members will know. We nailed the turn in the US Dollar Index (DXY) last week, which provided some great trading opportunities in the setups we had researched and put on our watch list in advance. The Canadian dollar (CAD) traded right into the middle of the 60 pip resistance area we had looked at, and USDCAD has since moved 230 pips in our favour (almost a 4:1 return on risk in one week). Of course, we did discuss a number of other ideas together, but as this is a public forum I will reserve those as a courtesy for our paying members.
Elsewhere, I’ve personally traded a couple of names (at my own discretion) away from this. The first is Overstock.com (OSTK), which we first featured in the Trading Club back in November (around $45 from memory - although its certainly been a volatile ride for buy-and-hold investors). Here’s a tweet I put out on Twitter before the open;
1 trading session, and 13% later… we were at the 50-day moving average (also, DeMark TD Sequential exhaustion signals have provided pretty good signals in Overstock).
I’ve also been active in UK tonic manufacturer Fevertree - arguably the nation’s favourite compliment to gin, which I heard on the radio in December (yes, thats how I first generated the idea!) is now the UK’s favourite spirit. Goes to show that it doesn’t always need to be complicated if you think like a consumer, just as Lex says in the stocks module of our Million Dollar Traders online course. I’ve ‘topped and tailed’ this one from my original entry around 2050p, selling into resistance around 2550p (2686p is the high), before getting back in at 2350p this week. Let’s see whether this popular momentum stock can keep its fizz! (Note, this is a PERSONAL trade and not representative of the process we follow at the Academy, but like everything it should NEVER be considered investment advice...)
Now, lets get to a couple of your questions sent this week…
Thank you so much for the Q&A material this week. Very informative and helpful. Appreciated.
I am writing to ask a question most of your students asked, I am sure :)
I know that the industry standard is Bloomberg Platform but as I don't have the money for it yet, I wonder what would be a good setup for a Prop trader without a desk in the City.
I have the account with [XXX] and they have their execution platform for free, but I don't find their charting package very good.
In your weekly commentary, I see that you are using TradingView. Is this something you would recommend, or it is just used for the educational purpose of your presentations?
Of course, I have done my research and found a handful of reasonably good products but I value your input so much...
Thank you and best wishes,
Ok, first up, lets discuss Bloomberg. Bloomberg is a fantastic tool - I started my career there as a graduate and became an expert in several hundred of their thousands of ‘functions’, which helped me build my knowledge and develop a number of trading models and portfolio strategies that I ultimately went on to demonstrate to some of the smartest investors around the world, including Lex (which is how we first met!). However, in my experience for most professionals it is a luxury and preserved as something of a status symbol. The vast majority of people in the City use perhaps 1% of the functions (think ‘apps’) available and probably only know how to derive 10% of the value from the information on there. Of course, there are some bonafide pro users out there too, but for most it is an expensive instant messaging system displaying real time pricing and broker research. The analytics (which are still superb in my opinion) justify the price tag if you know how to use them, but for most it is excessive and expensive. So, to answer your question - as an independent trader you DO NOT NEED A BLOOMBERG TERMINAL but I am sure that if you found yourself at a bank or hedge fund you would be able to do some real damage with it (in a good way - as opposed to hurling the keyboard at the market data rep).
Now, to the alternatives. TradingView is fine for charting, particularly if you trade daily intervals or longer (as we mainly teach). As a technician, I can say with confidence that you have everything on there that you could find on Bloomberg, with similar functionality to write your own technical study / strategy ‘scripts’ (admittedly I am not a programmer, so Bloomberg’s technical study interface is easier to work with - to each their own). TradingView is basically free to use, or for a similar cost to Netflix you can have all the 'pro' features as I do. FYI we are not compensated by TradingView for referring people to their platform, although they are good friends of ours and are kind enough to let us feature their lovely charts in our Trading Club videos.
I think its always a good idea to have separate platforms for charting and brokerage. Brokers of course get paid when you trade, so they design their platforms in a way that encourages you click the buy and sell buttons when you perhaps otherwise wouldn’t. Keeping the analysis and execution separate as you are currently is smart, but if you are day trading or scalping the order book (good luck!) then of course you do need a professional subscription and specialist add-on software as 90% of your performance will be determined by execution rather than your pre-trade process. We don’t have any affiliations there and we don’t really use those types of systems ourselves, so hopefully that helps clarify things for you.
Thanks for the work so far and im learning a lot...
I am a life time member to your study program and the time is coming close to pay again for my club membership..
I did notice on a email in December there was a trading club special in combination with extra study material
Is there any promotion on the trading club membership?
Forex can be frustrating and it seems so random at times..just a thought
Can you recommend at some stage what is the minimum amount of screens I need to work with..
My trading style ..I want to trade with a similar style as you with a +-month view on specific trades...
Thanks for the kind words - glad to hear that you are finding value in the Trading Club alongside the course. The promotion in December included a 3-month free trial of the Trading Club to new students enrolling on the MDT course. Whilst that particular promotion has since expired, I understand that our team have sent you a direct reply to see whether something can be arranged as a thank you for renewing your membership with us for another 12 months.
Moving on, to your question about the minimum number of screens you need - unless you have eyes in the back of your head, I have found that most humans can only look at one screen at once! Joking aside, it can be tricky working from a laptop if you have multiple applications or tabs open on your computer. 2 screens is great, 4 at the most (but lets be honest, one of them will end up with Twitter or the Daily Mail gossip page permanently open), so it is a matter of personal preference. I’ve seen walls of monitors stacked so high it would make Donald Trump take notice, but usually those guys are trying to avoid being interrupted by colleagues - in a home office setting, theres no need for such defences! The expression ‘all the gear, no idea’ also comes to mind for some…
As to developing your trading style, the Trading Club Checklist report is designed to track markets in this way with our interim commentary so you are definitely in the right place.
Thats all we have time for this week - thanks for all your questions!
Do keep your questions coming next week if there is anything you would like to ask me. And of course, if you haven’t already, there is no time like the present to take the step up in your education and join us here by taking the Million Dollar Traders course or Trading Club membership (you can also contact us at [email protected] to learn about available discounts and promotions).
Have a great weekend,
James Helliwell | Chief Investment Strategist
Disclaimer: Our service is intended for educational and informational purposes only and should not be considered investment advice. Do not make any decisions based on the articles and material presented on www.lexvandam.com and never trade with money you cannot afford to lose. We cannot be held responsible for your trading results. For more information, please check Risk Disclosure - T&C.